Bangladesh Bank loan defaulters facilities Provided by Govt
Loan defaulters facilities:
Businessmen and industrial entrepreneurs being affected by various uncontrolled affairs, bank loans are not being regularly adjusted.
Because of these, in many cases loans are being classified in any form and hampering loan disbursement and recovery activities; rather, increasing the amount of defaulted loans.
At the end of last year, the total defaulted loans in the banking sector stood at Tk 93,370 crore, up by 25.66 percent year-on-year.
Considering the issue, Finance Minister AHM Mustafa Kamal said that the government has unveiled a new proposition to allow ‘honest loan defaulters’ who have become loan defaulters ‘unwillingly’ and are unable to pay, but can give adequate justification for their situation, will be allowed to pay off their debts.
In view of this, some decisions have been taken to ensure the regular flow of loans in productive and other sectors.
- Q1: Who are good borrowers?
- Q2: Which sector will get the privilege?
- Q3: What privilege will they get?
- Q4: Criticism.
Loan defaulters: Who are good borrowers?
Bangladesh Bank by its circular BRPD Circular No 04 date 16 May 2019 outlined good borrowers as-
- Those having unclassified loan accounts for consecutive four quarters before September every year.
- The demand loan borrowers loan having unclassified for consecutive four quarters before September every year is adjusted.
- If a borrower has multiple loans, and each loan is obeyed by following the conditions specified.
- The term loan is repaid regularly for the last 12 months and having unclassified for consecutive four quarters before September every year.
- For any bank or financial institution, if any customer or his interest institution is not listed in any form of a classified loan.
Loan defaulters: Which sector will get the privilege?
According to BRPD Circular No-05 Dated 16 May 2019, the loan defaulters of the following sectors will be considered-
- Trading sector (wheat, food products, frozen and refineries), ship-industry (ship-breaking and ship-building), and iron and steel industries where the bank has a huge amount of money.
- Industry loan involving import and export of the non-agricultural sector of specialized banks.
- The actual business in other sectors identified by the bank through special scrutiny, which is classified as bad/harmful means for non-credit.
Loan defaulters: What privilege will they get?
- The defaulters will be allowed to reschedule their classified loans by making a down payment of only 2 percent instead of the existing 10-50 percent. To put it simply, an individual or entity would get the opportunity to take a Tk 100 loan after paying only Tk 2 against a defaulted loan amounting to Tk 100.
- A maximum of 9 percent interest will be charged on the rescheduled loans.
- The tenure for repayment is 10 years with a grace period of one year.
- A 10% rebate will be provided for the borrower. Later, every year the same benefits will be continued if the customer is regarded as a good lender. Also, increased credit facilities can be provided in favor of the borrower’s requirement.
- Based on the bank’s relationship with the client, the accrued interest on the defaulted loan can be waived, leaving the defaulter to pay only the principal amount with the new interest rate of 9 percent.
- Debit or credit card users will be required to provide special benefits (reward points, discount benefits, etc.)
- In addition, banks can reward good borrowers through the annual program.
Loan defaulters: Criticism
Though the decisions are taken to ensure the regular flow of loan, there are some other opinions which can’t be overlooked. These are-
- Khondokar Ibrahim Khaled, former deputy governor of the central bank, told the Financial Express that the move to provide a twelve-year loan restructuring facility will be an ‘absolute disaster’.
- Salehuddin Ahmed, former governor of the BB, told the Financial Express on revised policy for loan write-off that such a revision will affect ‘credit culture’ in the country.
- The banks concerned, however, will fall into more troubling situations if the client fails to repay both the loans to the bank thus resulting in a two-fold increase in the defaulted loans given by the banks.
- The former adviser to the caretaker government AB Mirza Azizul Islam told New Age that awarding the facilities would not help bring down the amount of defaulted loans, rather they would work as a stimulus for further defaulting.
- Toufiq Ahmed Chowdhury, former Director-General of Bangladesh Institute of Bank Management, told Dhaka Tribune that good borrowers will be discouraged to repay their loans by this and will jeopardize the banking sector, while loan defaulters will gain undue advantage.
In conclusion, though there is controversy regarding the decision of a 2% down payment, one-time exit facility, a 10-year loan repayment facility for the loan defaulters, the finance minister defined that the borrowing in our banking sector as of two types – honest and dishonest loan defaulters.
Special opportunities are being given to the honest loan defaulters. And, strict measures will be taken to retrieve the money from dishonest defaulters, or those who had intentionally defaulted on their loans.
বিঃদ্রঃ পরীক্ষায় আসা প্রশ্নের উপর নির্ভর করে প্রথম দুটো প্যারা + Criticism + Last টুকু ঠিক রেখে কিছু বাদ দিয়ে লিখবেন। এখানে মূলত ফোকাস রাইটিং আছে চারটা। এই ফোকাস রাইটিংটা একটু জটিল, তাই প্রথমে একবার রিডিং পড়ে যান। তারপর প্রত্যেকটা টপিকের পয়েন্টগুলো সংক্ষেপে খাতায় লিখুন। দেখবেন যে, এমনিতেই পারতেছেন।